Article

Editorial: What Will Apple’s Retail Changes Mean To You?

It’s nearly a truism that Apple’s retail store experience is legendary. Steve Jobs set out to reinvent the retail shopping experience for computers, and as was usually the case, he succeeded beyond anyone’s wildest dreams. With Ron Johnson at the helm, Apple’s stores quickly became a Mecca for longtime Mac users, and critically began to attract new customers—“switchers”—who were ready to transition from PCs to Macs. When Johnson left to head JC Penney, it was clear that Apple needed a special person with real vision to fill his shoes. Apple instead chose John Browett, formerly of British retailers Dixons and Tesco.com, stores that were widely criticized for poor customer experiences. While some were pessimistic about what Browett would bring to Apple, others believed that Jobs’ and Johnson’s ideals had become too embedded in Apple’s culture or DNA to be undone. Unfortunately, evidence continues to mount that the cynics were correct: reports suggest that Apple’s most consumer-facing employees are seeing their work environment and very employment threatened by recent changes. There’s every reason to believe that these actions could have a serious impact on Apple retail and the company as a whole.

To be clear about this at the onset, generating revenue has always been a primary goal at Apple’s stores. It’s been widely reported that Apple makes more dollars per square foot than any other retail chain, often by a large margin, even when compared against jewel merchants and stores selling expensive clothing. Yes, a big component of that is the high-ticket items it’s selling, and the margins it’s able to make by selling its own and third-party items at their full suggested retail prices. But just as importantly, Apple has very intentionally made its stores into destinations full of helpful people and services—locations where you don’t mind paying more because of the positive overall experiences you have inside.

Traditionally, computer salespeople work on commission, and are therefore looking to make the biggest sale they can. By contrast, Apple’s Specialists have been trained to find the right solution for each customer: it’s surprisingly common to hear a Specialist talk a customer down from a computer that’s clearly overkill, instead suggesting one that fits the person’s needs better. Similarly, the Genius Bar isn’t there to make money, but rather to repair and enhance relationships. Some of Apple’s Creatives run personal training sessions and group workshops, even though they don’t actually generate any revenue themselves. The key has been to create an experience that people love and promote to their friends and family while coming back in again and again themselves. This sense of trust and enthusiasm—not forced hard-selling of products—has generated all of the Apple Stores’ success and goodwill to date.

Despite recent reports that might suggest otherwise, it’s safe to assume that most Apple employees really like their jobs. When treated properly, they feel like they’re part of something bigger than just a store, and want to help customers the best that they can. Making people happy without pushing products or services they don’t need or want results in a positive experience for everyone involved, and still brings in a lot of money for the billions-in-the-bank company.

A few weeks back it was reported that, in an effort to maximize profit, Apple had dramatically cut the hours of its part-time employees. We heard an anecdotal report of a Specialist who usually got scheduled for 30 hours a week getting slashed to just 8, a dramatic change that can—for students and part-time workers—really change one’s life and earning potential. At the same time, there were hiring freezes and even conflicting reports of layoffs. In retail, these sorts of things aren’t terribly uncommon, but the timing was unusual: it happened during the back to school season, one of the busiest times of the year for Apple stores, and right before the launch of a new iPhone which will bring lines of hundreds to each and every store. The timing also coincided with some of the most profitable Apple quarters in history, and widely positive outlooks as to the company’s future performance. After the changes became public, it was reported that Browett attributed the issues to a new scheduling formula, and told managers to let employees know that “we messed up.”

Since then, ifoAppleStore has reported that while scheduling is back on track for the most part, major changes are quietly being made that may seriously damage the soul of the Apple Store. This includes slashing the number of free workshops available to customers, replacing already limited training areas with more sellable product, and—shockingly—investing less in keeping the stores clean. Additionally, while various metrics always been used to track employee performance, they’ve previously been focused on whether staffers sold solutions such as AppleCare and One to One, which aren’t purely profit centers. Now, according to ifoAppleStore, the chain is putting a higher emphasis on sales volume, and putting pressure on Specialists to convince customers to pick up cases and other accessories along with their purchases.

As anyone who’s shopped in an Apple Store over the past few years can tell you, more employees are needed during busy times like these, not fewer. And although it mightn’t be apparent immediately, reducing services to facilitate more selling is eventually going to have a negative effect on customers’ experiences. These decisions seem to come from people who simply don’t understand or fully appreciate the fundamentals that Apple Retail was built on—the vision that Steve Jobs and Ron Johnson had. Of course mistakes have been made in the past, but none have seemed so obvious and serious to so many insiders and outsiders alike.

If things keep going this way, it’s seriously possible that Apple Stores could quickly become more and more like the retailers they were designed to be the opposite of. Higher sales requirements could mean bringing in more “salespeople” and fewer passionate Apple fans. Potential employees who have made Apple Store recruitment comparably selective to Ivy League schools may look elsewhere for positions. And customers could very well be turned off by dirtier, pushier stores offering fewer services to bring them back in. Not many people actually like the experience of shopping at say, Best Buy, and many actually actively dislike it. It’s time for Apple to roll back its latest changes, have some serious discussions about the thinking that led to them, and start planning for a better, happier future.

Comments

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Welcome to my world. I work for an organization that works for the military overseas. The laying off of performers and lowering of facility upkeep budget in favor of the hiring of apathetic teenagers as well as self entitled spouses has been killing morale and efficiency for over a decade. The profits that came at the beginning of this implementation have long since been replaced by lower customer satisfaction and disciplinary paperwork. Overtime doesn’t exist, but we are expected to work past our normally scheduled hours regularly, then watch as our timecards get adjusted back to the 40hrs a week max. We’ve tried fighting, but it’s not a battle we will not win. So, it is what it is. At least I have a job and am close to family is what I keep telling myself.

Posted by Cereal in Japan on August 28, 2012 at 4:49 PM (CDT)

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Well said. Though I haven’t observed the specific shortcomings you describe in your editorial, I have stopped enjoying the Apple retail experience. For about a year now, I’ve run into too many employees with very limited knowledge in stores that are overrun with crowds.

It used to be - 3 years ago - that I was immediately greeted upon entering and professionally handed to a extremely helpful employee. Now, as is typical in other retail stores, I can stand by a display for 10 minutes, hoping against hope that one of the employees will acknowledge me. And when I do talk to an employee, I usually know more about the product than they do.

And the Geniuses aren’t much better.

I’ve stopped going into the retail stores because of all of the above. It’s very sad because it does affect my opinion of Apple’s products.

Posted by Alex on August 28, 2012 at 5:13 PM (CDT)

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On our last trip to the Apple Store, my wife walked in and asked to purchase a 16GB iPad 2. The store was so understaffed that after a half hour of waitng for an available employee to just grab one and ring it up, my wife just left and went to Best Buy, where she was able to purchase one with no waiting.

I generally do not like Apple Stores, as they seem to cater more to the hipster Apple fans and the uninitiated than they do to anyone else. I liked them better years ago, back when those who used Macs for a living could actually get some helpful advice from employees that knew more about Apple products than the knowledge from a training manual could provide.

Posted by Xeem on August 28, 2012 at 9:26 PM (CDT)

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The main problem with Apple stores is that they are so packed with people that it is a nightmare on occasion. I enjoy being around a crowd of Apple fans, but when you can’t get close to the wall of iPhone cases to browse for example because a sales table is only 2 feet from the case display wall and is crowded with other customers and staff assisting them with their purchases, the experience is lost on the customer, and they will, as others have said, leave for Best Buy. I do realize a crowded store conveys excitement about what is being sold inside to potential new customers, so a balance has to be struck.

Posted by ggore on August 29, 2012 at 7:19 AM (CDT)

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Given the mixed bag experience at my local Apple store over the years (and I’m not exactly in a huge metropolitan area), any cutbacks to staff and services can only harm Apple’s impression.

As much as I have criticized Jobs for his faults and deeds after he returned to Apple, one thing he did bring back to the company was a genuine plan for competing with “everybody else”, a part of which was the difference of experience at the Apple stores. It hasn’t always succeeded (crowds, inability to actually buy anything for the fact that all the blue shirts are tied up explaining iPhoto to a cavalcade of techtards, etc.), but even when it failed, know what?, still not any worse than the *typical* experience at a Best Buy or Radio Shack. I would hate to see them take such a running leap backward in the interest of increasing short term profits at the expense of becoming just like everyone else.

Posted by Code Monkey on August 29, 2012 at 11:45 AM (CDT)

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This is just heartbreaking to read. Steve would be turning in his grave. The key to making money is to not be so obvious that its about the money. An Apple store was about getting the most out your product, not your wallet.

Posted by Alan on August 29, 2012 at 8:11 PM (CDT)

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The fantastic thing about the retail stores is that anyone, anyone who wanted to learn and discover what Apple’s innovations can do enrich their everyday lives played a key role into hooking you into purchasing an Apple product. Heck, I’d sit through many instructional keynotes or hands-on demos just because I got to be more informed or perhaps maybe enjoyed sharing my own knowledge with new Apple buyers as well. You do not get that experience else where in a retail setting anymore. My experience has also been a mixed bag as well. Sometimes I’d wait a while, other times less that 30secs for someone to acknowledge me. But I see doom at Apple’s door step now that a squeeze of the consumers wallet is in game more so than when Steve was alive. I fear that Apple will take several steps back and forget everything that Steve installed while he reigned. I own Apple products NOT because I was force fed by people who sold me things, I was sold on the innovated ways I could use the iPod, the iPhone, and even AppleTV in ways no one imagined 10yrs ago. Apple just better be careful - don’t bite the hand that feeds you.

Posted by Victor J. on August 29, 2012 at 9:25 PM (CDT)

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None of this is out of the ordinary for Apple retail. Things like this have been implemented many times in the past. It’s very common, you just never knew about it. The only difference is that now there is more interest in the “behind the curtain” aspect of Apple Retail than ever before. More interest means more leaks by employees and former employees and any change is more salacious and bigger news than ever before. If you wrote an editorial every time changes like this were implemented at Apple Retial you would be writing one every few months, or weeks even.

For example, the janitorial budged for stores has been cut before. Almost 7 years ago most stores went from nightly janitorial services to just a few nights a week. Hours for part time employees have been cut many times in the past usually to give way to more hours for full time employees who are earning medical benefits. Part time hours are always in flux. In retail it is the quickest, most instantaneous way to save money for the week, month or quarter.

So really, don’t worry. Things won’t be chngeing as far as the customer experience Joni’s concerned. At it’s heart Apple Stores are retail stores and while the customers may experience something different from other retail chains, the stores themselves are a business and need to be treated as such in order to maintain popularity and profitability.

Posted by Dvjn on September 1, 2012 at 3:49 PM (CDT)

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Are the stores changing from promoting a concept to selling a widget ? If so, this will be a significant change in how Apple does business. People readily pay a premium for a trendy concept. People view widgets as commodities that are purchased at the lowest possible price. Is this a sign from upper management that future growth expectations are lower, hence profit will have to come areas other than direct product sales. Longer term this could be the beginning of the maturation of Apple from a high growth company to large cap blue chip company with comparably slower growth rates. Historically, such transformations take several years. But during the transformation, the stock essentially goes sideways.